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Sunday, 10 September 2017

"Bell Pottinger’s Middle East business has become the latest part of the scandal-hit London-based PR agency to seek to separate after its local management made a proposal to spin off the division. Bell Pottinger is expected to enter administration as early as Monday, after clients and key staff deserted the agency in the wake of reports that found it had stoked racial tensions in South Africa through its work for the powerful Gupta family. Directors of Bell Pottinger Middle East (BPME) said on Sunday that the company was “in discussions to formalise a separation from its current owner Bell Pottinger Private Limited”."

"For UAE business folk, there is no escaping the fact that January 2018 will see the introduction of VAT on sales and leases of commercial property, as recently confirmed by the country’s Ministry of Finance. Offices, shops and other commercial property will be subject to the new 5 per cent levy. However, sales and leases of residential property will be exempt from the tax, along with undeveloped land. Property development and the first sale of new homes will be subject to a zero rate of VAT. The word tax may strike fear into those who have lived and worked in the country for a long time, but several real estate professionals say they in fact welcome the move."

"The UAE government’s consistent effort to stabilise the country’s public finance through combination of fiscal consolidation efforts ranging from spending cuts, rationalisation of publicly funded projects, subsidy reforms and efforts to diversify government revenues are resulting in tangible improvements in government finances according to economists. “We forecast that the UAE’s consolidated budget deficit will remain contained, narrowing to 2.9 per cent of GDP in 2017. We forecast a further reduction in the fiscal deficit in 2018 given the introduction of VAT [value added tax] next January,” said Monica Malik, chief economist of Abu Dhabi Commercial Bank (ADCB). The UAE is expected to raise revenue of about 1.6 per cent of GDP in the first year following VAT implementation. In addition, the introduction of excise duties on some goods are also expected to add to government revenues. The government will introduce an excise tax on a few unhealthy products from 1 October 2017. The UAE is looking to levy a tax of 100 per cent on tobacco products and energy drinks and 50 per cent on carbonated drinks, excluding sparkling water. Official estimates suggest that the boost to government revenue from this tax will be small at Dh7 billion — equivalent to about 0.5 per cent of 2017 GDP for a full year of implementation."

"Iran will reach an oil production rate of 4.5 million barrels per day (bpd) within five years, Ali Kardor, the managing director of the National Iranian Oil Company (NIOC), said Sunday according to the oil ministry news site SHANA. Iran has been producing around 3.8 million bpd in recent months. Iranian gas production will reach 1.3 billion cubic meters per day and production of gas condensate will reach 864,000 bpd in the next five years, Kardor said."

"Bahrain is tightening its rules for Islamic banks by requiring all of them to undergo independent, external audits to certify they are following Muslim laws known as sharia. The move, announced by the central bank on Sunday, could make Bahrain among the strictest jurisdictions for Islamic banking and help Manama maintain prominence in the industry, which it helped to pioneer, against competition from centres such as Dubai and Kuala Lumpur. Islamic banks in the Gulf have traditionally used in-house boards of scholars to determine whether their products and operations obey sharia, which includes rules such as bans on interest payments and pure monetary speculation."

"Abu Dhabi National Oil Co (ADNOC) could list more than 10 percent of its fuel retail business by early 2018 and one or two more businesses later as part of a major shake-up, sources familiar with the matter said. The listing for ADNOC Distribution, which manages petrol stations and convenience stores across the United Arab Emirates (UAE) as well as bunkering facilities and a lubricant plant, comes as Abu Dhabi and other Gulf states are privatizing energy assets in an era of cheap crude. ADNOC said in July it planned to float stakes in some of its services businesses, but did not give details."

"Kenya's mountains of plastic bags might not seem central to oil's grand narrative, but they are. Last week, the East African country banned almost everything about them: making them, importing them, selling them, using them, with penalties of up to four years in jail or fines up to $38,000.

This type of prohibition carries a warning for an oil business that's depending on petrochemicals -- and the plastics made from them -- to pick up the slack when we all switch from gas guzzlers to electric cars. Saudi Aramco is betting its future on petrochemicals. The International Energy Agency thinks they'll drive crude sales for decades, accounting for 44 percent of oil demand growth between 2015 and 2040."

"Stock markets in the Middle East were mixed in narrow ranges on Sunday, with banks and petrochemicals supporting Saudi Arabia while Qatar edged down to a fresh 18-month closing low. The Saudi index rose 0.2 percent. All but two of the 14 listed petrochemical shares advanced after a pick-up in oil prices at the end of last week, with small polymer maker Nama Chemicals surging 9.5 percent in unusually heavy trade. Two-thirds of the 12 listed banks rose with Banque Saudi Fransi, the best performer, climbing 3.8 percent."

"Saudi Arabia's property market has been hit hard by the kingdom's stalled economy and austerity drive, all designed to help the government cope with low oil prices.

Rents in some part of the country could fall by more than 50 percent over the next year as millions of expatriates prepare to leave the Gulf state as the government takes aim at them to shore up cash, the Financial Times reported.

It comes as Saudi Arabia introduced the so-called expat tax, meaning foreign workers must pay $26 per dependent living in the kingdom with the tax set to rise rapidly in the coming years.

As many as 2.5 million of the country's 10 million expatriates are expected to leave by the end of next year as foreigners' tax-free lifestyle comes to an end."

"Dubai is typically associated with luxury lifestyles, but investors are increasingly looking to cheaper housing stock to make gains in the face of a continuing fall in residential prices overall.

The emirate’s property market has been in decline since 2014 and analysts predict it will hit bottom later this year before starting a slow recovery. “Prices in Dubai have declined for 12 consecutive months and the declines we are seeing are what I describe as probably a soft correction,” says Faisal Durrani, head of research at Cluttons, the property agents.

Values across Dubai’s freehold residential districts fell by 8.8 per cent in 2016, which was this market’s weakest annual performance in five years, according to Cluttons."

"Oil has denied Saudi Arabia the opportunity to overtake South Africa as the biggest stock market in the Middle East and Africa, even as political turmoil and a faltering economy hold back share prices in Johannesburg.

The total market capitalization of the South African bourse was $489 billion as of Friday, about $25 billion more than that of Riyadh’s after its main index advanced 10 percent this year, about five-times the gain in Saudi Arabia’s Tadawul All Share Index. The kingdom’s market reforms, which were designed to attract foreign investors, have been countered by the effects of lower crude price, the kingdom’s main source of income."

"State-backed Abu Dhabi Investment Council is weighing the sale of its nearly 24 percent stake in Abu Dhabi National Insurance Co (ADNIC), with Allianz among groups showing initial interest in buying it, sources familiar with the matter said. If the deal goes ahead, it will further boost Allianz’s presence in emerging markets and give the global insurer a stronger position in the United Arab Emirates (UAE), a market seen as ripe for consolidation. Abu Dhabi Investment Council might hire an adviser for the deal, one of the sources said."

"Plans to sell a stake in Saudi Arabian Oil Co. are “well underway,” the government said on Saturday, as the kingdom redrafts one of its key economic blueprints to eliminate overlap with other reform programs.

The government’s privatization program “continues to gain traction,” the Ministry of Culture and Information said in a statement. Officials have said the kingdom plans to sell as much as 5 percent of Aramco next year in what could be the world’s biggest initial public offering.

"The IPO process is well underway and Saudi Aramco remains focused on ensuring that all IPO-related requirements are completed on time and to the very highest standards," it said."